The idea that writers make a lot of money is a misnomer. And a terrible one at that. Those that do attain wealth are a rare 1% and still cannot contest the riches of Hollywood, Business or Sports People.
Today I will attempt to show you just how little money a writer makes, even if they do attain a sweet advance.
(Note: This will not take into account royalties, foreign sales, film options and other revenue sources; this is a basic calculation of the losses attributed to the advance paid by a publisher. The 2011 U.S. Federal IRS taxes will be applied.)
In publishing, you gain what is called an advance. This is a publisher's estimate of risk and can fluctuate based on market trends, sales record and foreign rights potential. Basically, a publisher pays you based on how well they assume your novel will sell. The average author receives $30,000 and can climb to as high as $5,000,000 (as with the case of Audrey Niffenegger's second novel, Her Fearful Symmetry). The module used to define the monetary value of an advance is as follows:
"nice deal" $1 - $49,000
"very nice deal" $50,000 - $99,000
"good deal" $100,000 - $250,000
"significant deal" $251, 000 - $499,000
"major deal" $500,000 and up
(Learn more about an advance here)
An agent can get you a decent advance, as well as build your career, however, he needs to be paid and so does the government, apparently. The IRS deducts anywhere from 10% - 35% of your earnings (after deductions and exemptions) and an agent takes 15% of whatever monies you make from the works he sold. Let's assume you got lucky and landed a good deal, before you quit your job to become a full time writer, understand that that amount isn't what you get.
15% of $100,000
Tax Year: 2011
Filing Status: Married, Filing Jointly
Taxable Income: $85,000
Percentage of income: 15.88%
Tax Bracket: 25%
Your disposable income will be: $71,500
(Calculate your taxes here)
This still isn't too shabby - most authors don't receive good deals, even for series books -, but is by no means enough to support a family of four. . .five. . .six for a year. You can, however, make good money from writing, but that, like all things, take time.
So, if you have dreams of becoming rich and famous from your first book, then I must sadly inform you of your delusion. Let that novel be the stepping stone to a bright career - and who knows. . .you just might make it into that coveted 1%.